Evolving Proppant Supply and Demand: The Implications on the Hydraulic Fracturing Industry

Abstract

Abstract Flashback 10 years ago to 2008: the North American hydraulic fracturing industry utilized a then record breaking 21.41 Billion pounds and experienced exponential growth year-over-year (excluding 2015 and 2016). Prior to 2008, proppant demand grew at a relatively modest pace and overwhelmingly consisted of 20/40 mesh high quality natural sands and synthetic proppants. Fundamental changes in drilling and completion practices has given rise to a significant increase in the application of smaller mesh proppants, most notably 40/70, 30/50 and various forms of what is generically referred to as 100 mesh sand (i.e., sands that are predominantly smaller than 70 mesh) in natural gas and liquid applications. Proppant demand has now soared, increasing significantly as a result of the new high-intensity completions practices in horizontal wells. In 2018, an estimated 200 Billion pounds will be used for the first time in history (or 10 times that used in 2008). The proppant supply industry responded well to the increased demand in the past decade, but the industry is increasingly concerned about future supply limitations and the potential impact on completion practices subject to high volume, quality and mesh size availability. This paper summarizes the historical supply of proppant by type and source, and the driver for each proppant type based on the authors’ current and prior research. The paper will further clarify the basics of proppant by type and size (e.g., what is 100 mesh?) and will address some of the challenges that both the proppant supplier and end-user may face subject to current or desired completion practices. Key observations will be: 1) Potential limitations in the amount of proppant size and type, 2) The impact that specific proppant shortages may have on both supplier and end-user, and 3) Risk factors the proppant supply base may experience subject to future changes in completion design. The objective of this effort is to encourage the need to study alternative completion designs subject to proppant availability. It is specifically not the intent of this paper to propose one form of completion practice or proppant type over the other.